Correlation Between East West and Stamper Oil
Can any of the company-specific risk be diversified away by investing in both East West and Stamper Oil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining East West and Stamper Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Petroleum and Stamper Oil Gas, you can compare the effects of market volatilities on East West and Stamper Oil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in East West with a short position of Stamper Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Stamper Oil.
Diversification Opportunities for East West and Stamper Oil
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between East and Stamper is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding East West Petroleum and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper Oil Gas and East West is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on East West Petroleum are associated (or correlated) with Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of East West i.e., East West and Stamper Oil go up and down completely randomly.
Pair Corralation between East West and Stamper Oil
Assuming the 90 days horizon East West Petroleum is expected to generate 3.65 times more return on investment than Stamper Oil. However, East West is 3.65 times more volatile than Stamper Oil Gas. It trades about 0.15 of its potential returns per unit of risk. Stamper Oil Gas is currently generating about 0.22 per unit of risk. If you would invest 3.00 in East West Petroleum on November 7, 2024 and sell it today you would lose (0.20) from holding East West Petroleum or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
East West Petroleum vs. Stamper Oil Gas
Performance |
| Timeline |
| East West Petroleum |
| Stamper Oil Gas |
East West and Stamper Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Stamper Oil
The main advantage of trading using opposite East West and Stamper Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Stamper Oil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Stamper Oil will offset losses from the drop in Stamper Oil's long position.| East West vs. Agnico Eagle Mines | East West vs. Osisko Gold Ro | East West vs. Gold Fields Ltd | East West vs. AngloGold Ashanti plc |
| Stamper Oil vs. East West Petroleum | Stamper Oil vs. Valeura Energy | Stamper Oil vs. Invictus Energy Limited | Stamper Oil vs. Africa Oil Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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